Deutsche Bank to face regulatory fines over foreign currency trades

Bloomberg

Deutsche Bank AG is expected to be fined by the Federal Reserve and New York’s Department of Financial Services for its conduct in the foreign exchange market, a person familiar with the matter said. The German lender said that the US Justice Department had closed a criminal inquiry into its currency-trading activities without action.
But regulators are in the final stages of their own reviews of that conduct to determine what fines, if any, the bank should pay, the person said. The Federal Reserve has finished its investigation, the person said, and the New York bank regulator is close to wrapping up its own probe.
Deutsche Bank has moved beyond most of its legal challenges in the US In the past two years, it has struck settlements with the Justice Department over allegations of interest-rate manipulation and its sale of toxic mortgage securities. Separately, it reached settlements with the DFS over sanctions violations and “mirror trading” that moved billions of dollars out of Russia. The bank also paid a $2.5 million civil penalty to the Commodity Futures Trading Commission for failing to report its swaps transactions.
While the bank no longer has to contend with the Justice Department’s foreign exchange probe, the US attorney’s office in Manhattan is continuing its investigation of sanctions violations and the Russian mirror trading. Dawn Dearden, a spokeswoman for the US attorney’s office in Manhattan, has declined to comment on the status of its investigation.
The DFS opened its currency probe of Deutsche Bank and Barclays Plc in 2014, focusing on conduct using their electronic trading platforms. The regulator eventually expanded its investigation to four other banks operating in the US under a state charter: Goldman Sachs Group Inc., BNP Paribas SA, Credit Suisse Group AG and Societe Generale SA.
Overlapping currency investigations by law enforcement and regulatory agencies have ensnared several big banks. Five pleaded guilty in 2015 in connection with the US Justice Department’s currency-trading probe — Citigroup Inc., JPMorgan Chase & Co., Barclays, Royal Bank of Scotland Group Plc and UBS Group AG.
Deutsche Bank was the largest participant in the foreign exchange market to escape Justice Department action. The bank still has to contend with a civil suit against it and 15 other banks. In the suit filed in Manhattan, the plaintiffs allege currency rigging in online chat rooms where 22 currencies were discussed.
In one chat room open from early 2008 until late 2012, Deutsche Bank traders discussed the Canadian dollar and New Zealand dollar with traders from six other banks, according to that suit. The Justice Department had asked more than a year ago for certain details of the lawsuit to be made confidential to avoid disclosing information that could interfere with its own investigation.